Experts think financial woes won't last long
Butler County experts believe the economic impact of the novel coronavirus 2019 pandemic will largely be short and harsh.
“If this is contained relatively quickly, there's a good chance the economy is going to rebound, and we'll see very little long-term impact on the economy,” said Sunita Mondal, an associate professor of economics at Slippery Rock University.
On Sunday, the Federal Reserve made a 1 percent emergency cut, bringing its key interest rate to between zero and 0.25 percent.
The central bank said it would stay there until it feels confident the economy can survive a near-shutdown of activity in the United States.
Stocks keep plummeting
Despite this effort, stocks plummeted by 2,997 points on Wall Street Monday, prompting a temporary trading halt. This is the third time the stock market experienced a “circuit breaker” in the past two weeks.
“It's a built-in mechanism to prevent the market from completely crashing,” Mondal said.
Circuit breakers function automatically and stop trading for 15-minute periods when major indexes see losses at predefined levels, such as 7 percent, 13 percent and 20 percent.
“It's just a way to hold off the panic-driven sell-off in the market,” Mondal said.
Howie Pentony, of Pentony Capital Management, said there are other impacts on the market right now, but COVID-19 is the biggest factor.
“Right now in the press, it's all about the coronavirus,” Pentony said.
Pentony said he has been advising his clients for months to put some money away, so they don't have to sell their investments to make ends meet.
“Everyone's decision about what they're going to do is really up to them. It depends on their circumstances and their situation,” he said. “You hate to sell when the market is low.”
Pentony said those who have the means to do so will likely refrain from selling right now.
Investors 'hanging in there'
“Most of the investors I talk to are hanging in there,” he said. “They're trying to get through this.”He said when the market sees massive drops and circuit breakers, it scares people. He said the federal government stepped up in offering emergency assistance when it did.“I think we're trying to be proactive, we'll just have to see if it works,” Pentony said. “It's a difficult problem.”Mondal said the quick action of the federal government to provide relief will be beneficial at all levels.“We will take a loss. There is no question about it,” Mondal said. “The impact, the severity of that loss can be minimized with that kind of fiscal stimulus.”Mondal said the fact that the market was healthy when COVID-19 struck is good because it does not worsen an already bad situation. She said the nature of the market is to ebb and flow.She said she expects the first and second quarter gross domestic product to be negative.“The economy has the ability to rebound relatively quickly,” Mondal said.Pentony said the problems of the stock market will be present in tangible forms at a local level.“If you have to close restaurants and close schools, that all trickles down locally,” he said. “That's going to have an effect on you. You don't have a job if customers aren't coming.”As of Monday around 2 p.m., there were no reported cases in the county of the virus, according to a Butler Memorial Hospital spokesperson.Pentony said this will be a scary time for most, but he sees the potential for the market to correct when the dust settles, and he sees the potential for the people of this nation to overcome COVID-19.“We Americans can survive just about anything,” he said. “But this is very difficult, no doubt about it.”
